Friday, December 31, 2004

We are in the middle of the aid giving frenzy at the moment. As my colleague has pointed out, there seems to be a "beauty contest" as to which organization or country will give more. Not, you understand, which organization or country will achieve most through its aid, but which will give more money.

British people, we are told, have donated over £45 million already. (Another way of calculating that is to say that £1 million is being given every hour.) The British are known to be generous, but did any of those donors stop to ask what that money is for and what will happen to it? Somehow, I doubt it.

After all, did any of the ninnies who bought the reissue of Bob Geldof’s BandAid record stop to ask why the whole process needs to be gone through again, twenty years after the original kerfuffle? Did anyone recall that Geldof himself acknowledged on the tenth anniversary that none of the money he had raised had gone to the supposed recipients? Of course not. Thinking is not something you are supposed to do when it comes to giving aid. None of those who had contributed to the £45 million (with more to come, I expect) would like to be told that the likelihood is that the money will swell numbered accounts of officials in various off-shore tax havens.

As the American ships steam in and hand out aid that actually does some good; as the EU calls a donors’ conference two weeks too late, thus guaranteeing that its aid will do no good and a great deal of harm; as the various NGOs strut the stage, make political speeches but fail to distribute the vast amount of aid that has already been collected; other voices are being raised as well.

There is a certain sameness about natural disasters and their effects. They happen all the time, they cannot be stopped or prevented, they hit rich countries and poor. But the results are completely different. Rich countries are hurt, a few people die, some property gets destroyed. Then immediate aid is distributed and the rebuilding starts. Within a few months all is back to norm.

Poor countries are hit by disasters on the same or, even, smaller scale and they are devastated. Tens of thousands die, whole cities and regions are destroyed, the economic fall-out lasts for decades if not for ever.

After many years and many disasters, it has now become more or less acceptable to point this fact out, though it is still difficult to make people listen to the arguments about the evils of aid. One of the organizations that has been voicing such “heretical” thoughts consistently, throughout its history is he Mises Institute. One does not have to agree with their daily articles (for my taste, they are far too focused on economics without paying enough attention to political ideas) in order to note the good sense in many of them.

Today’s example is of interest. Entitled Government-Enhanced Disaster, it goes through the arguments about the effect natural disasters have and what should be done afterwards.

First the different effects on rich and poor countries, the same differences being noted both geographically and historically:

“In December, 2003, 30,000 people were killed in Bam, Iran, as an earthquake destroyed eighty percent of the buildings in the city. Thirteen years earlier, 40,000 people were killed by an earthquake in Gilan, Iran. In 1998, in Honduras and Nicaragua, Hurricane Mitch killed at least 10,000 people.

In Bangladesh, according to a 2001 UN report, chronic typhoons and flooding have killed over a half million people in the period from 1970 to 1998. Over the same period, 1.2 million died from drought-induced famine in Ethiopia.Many other poor nations have suffered similar catastrophes in recent years. According to the United Nations Development Programme, while only 11 percent of people exposed to natural hazards live in poor countries, they account for more than 53 percent of the total number of deaths. From 1980 to 2000, North Korea had the highest annual per capita death rate from disasters, followed by Mozambique, Armenia, Sudan, and Ethiopia. These are also among the very poorest nations in the world.

This correlation between poverty and natural disaster seems to hold up not only with a cross-section of nations, but also over time. As nations become wealthier, their losses of human life from natural calamities tend to fall. The 1906 San Francisco earthquake (and the subsequent fire) killed at least 3,000 people out of a population of about 400,000. The 1994 quake in the same area killed only 60, out of a population that had almost doubled. Over 8,000 people in the Galveston, Texas area died in the hurricane of 1900, but hurricane Andrew's 1992 path through a much more heavily populated Florida killed only 40 people.”

Several things are missing from this account. One is that an earthquake of greater strength as the one that hit Bam, hit California at the same time and few people outside the area bothered to notice it, because its effects were minimal.

Furthermore, it is worth adding that the worst hit countries are not just poor but live under extremely unpleasant and, even, totalitarian governments. It is not entirely accidental that North Korea should have the “highest annual per capita death rate from disasters”, while South Korea, just down the road, seems to come nowhere at all in the list.

The Ethiopian famine (remember BandAid?) was caused not so much by drought but by Colonel Mengistu’s Stalinist collectivization policies and the murderous war he was waging on the people of Eritrea. And so on, and so on.

The article goes on to discuss what should be done to prevent the catastrophic effect of these natural disasters. This is where the Mises Institute and, indeed, many of us, part company with received wisdom. As the author of the piece, Timothy D. Terrell says, it is counterintutive to suggest that what you need after an event of this magnitude is less rather than more government interference.

Government regulations will channel money into one particular aspect, for instance stronger foundations for buildings. That will ensure that there will be no money left for communication, meteorological work, medical aid, transport and all the many other aspects of disaster control that are absolutely essential.

Furthermore, as Mr Terrell does not add, the chances of those rules for stronger foundation being obeyed and the money intended for such construction being spent the right way in the countries in question are negligible. Those who can afford it, might build the right way, giving the necessary bribes; those who can afford only the bribes, will give those to be allowed to build any old how; and those who cannot even afford the bribes, will go on living in shanty towns until the next disaster.

People, Mr Terrell rightly points out, tend to understand what is good for them and do not need government officials to instruct them or impose regulations on them. Apart from the inherent inefficiency of the system, from the inevitable corruption that accompanies state control, it also requires ever higher levels of taxation (which may or may not be paid). Higher levels of taxation, as we know even in the developed West with the relatively transparent political system, destroy productivity and economic growth, the very factors that are needed for the creation of a system that will enable regions to deal with natural disasters.

It is noticeable that the one country that managed to evacuate people in time to prevent complete devastation by the tsunami was Kenya, one of the few places in Africa where the dead hand of the state is beginning to be losened and where globalization and foreign investment are not dirty words.

Western donors will, of course, participate in the charade. We shall continue to provide aid that will get misused or even stolen, that will keep the corrupt and oppressive politicians in place. And the great transnational oligarchy, full of its own importance will continue to shriek its abuse of globalization, of capitalism, of foreign investment. Until the next disaster, which will once again kill many thousands of those people whose lives would have been controlled by their own corrupt officials and the unaccountable tranzies, led by the European Union and its own corrupt and unaccountable aid-giving oligarchy.

According to DefenseNews, French defence minister Michèle Alliot-Marie has confirmed that the EU's Galileo satellite navigation system will be available for French military use.

Alliot-Marie, who has been remarkably candid about French military ambitions, was speaking at the launch of the French Helios 2A military reconnaissance satellite on 18 December.

This was only one week after EU member state transport ministers at the Transport, Telecommunications and Energy Council meeting in Brussels on 9-10 December had reiterated in their written conclusions that "Galileo is a civil program under civil control."

This is the same language they have been using since the Galileo programme was launched in March 2002, and is now shown for the naked lie that it is and always was.

This is further confirmed by Andrew Brookes, an aerospace analyst at the London-based International Institute for Strategic Studies, who on 22 December said that, "One of the justifications for Galileo is that it will allow any new Euro defence force to have access to the same space assistance as is provided to U.S. forces by GPS." He was referring to the U.S. Global Positioning System used by civilians and military personnel worldwide.

Brookes said Galileo could be used for pinpointing the location of weapons and troops on the ground.

This will come as absolutely no surprise to regular readers of this Blog, and the various links to the subject can be followed from this link.

Whatever views one might have about the EU developing its own separate defence identity, together with its own, independent space capability available for military use, what really is unacceptable is the deceit surrounding this project.

But it add that it will also "play a role in security operations such as humanitarian aid, evacuation of refugees, peacekeeping and crisis resolution", which implies military usage without actually admitting it.

Interestingly, in a classic example of the chutzpah for which the EU is famous, the pamphlet uses a photograph to illustrate one Galileo application, with the caption: "Fire-fighting planes are guided to the heart of the blaze by satellite navigation".

The picture shows a Canadian-built Canadair CL-415 amphibian and, given that Galileo constellation is not yet up and flying, if it is guided by satellite, it must be using the American GPS system.

I suppose it is of some comfort to learn that each nation has its share of bien peasants, ever-willing to denigrate the efforts of their own nation and to side with its critics.

Such is the tenor of a piece published in the New York Times today, republished in the International Herald Tribune supporting the UN emergency relief coordinator, Jan Egeland, who has called the overall aid efforts by rich Western nations "stingy" – with his eye very much on “America's initial measly aid offer of $15 million” to the victims of the tsunami disaster.

The NYT/IHT come down firmly on the side of Egeland, stating that he was "right on target". Says the piece: "We hope Secretary of State Colin Powell was privately embarrassed when, two days into a catastrophic disaster that hit 12 of the world's poorer countries and will cost billions of dollars to meliorate, he held a press conference to say that America, the world's richest nation, would contribute $15 million. That's less than half of what Republicans plan to spend on the Bush inaugural festivities."

Comparisons are now being made with the amounts of money being offered or pledged by various donor countries and organisations, in what is becoming an obscene "beauty contest" as groups vie with each other to be seen to be the most generous.

But what is being lost sight of is that money alone is not the answer to immediate disaster relief and in fact money, in itself, is not an answer at all. This has to be converted into practical help and unless the physical means to deliver aid are present, the money might just as well rot in the banks for all the good it will do.

In that context, there is a letter in today's Telegraph from Prof. Euan Nisbet, Department of Geology, Royal Holloway, University of London. He reminds us that tsunamis can be destructive anywhere in the world and that many of the world's most vulnerable countries are in the Commonwealth.

To deal with a possible disaster, in addition to setting up a warning system, he also suggests that we should have stand-by naval vessels, possibly converted from old ferries, loaded with food, medicine and helicopters.

However, this, in effect, is a role which is being admirably performed by the US Expeditionary Strike Group 5, comprising the amphibious assault ships, USS Bonhomme Richard, USS Duluth and USS Rushmore, which we featured in an earlier posting.

Moreover, the collective costs of this hardware are well in excess of $2 billion, yet the provision of this form of direct aid does not figure in the cash sums offered by the US government.

In the days and week to come, we will start to hear stories of piles of aid rotting on quaysides, of congestion in airports and distribution problems, with whole communities left untouched by the flood of aid that is winging its way towards the disaster area. All this will illustrate that the most pressing problem in disaster relief is often distribution.

Yet it is precisely here that the US assets will prove most valuable, far more so than the flood of money, much of which we know from past experience will be wasted, misused or unspent. In fact, the aid offered will be more precious than any amount that money can buy after the event.

Thus, as the politicians and the bien peasants take over, and the EU assumes its customary air of moral superiority, it will be important to remember that, when it comes to offering real practical help, the NGOs and especially the trans-national organisations like the UN and the EU will not feature highly.

Instead, it will have been nation states, like the US, and like Australia, India, Japan and others, who will have been there in the thick of it providing the action instead of words.

Even without the horrific news from South-East Asia and the undoubted recriminations and misdirected funds that is the news to come, this is not the time to feel anything but depressed.

I have always found it very sad that a country that has been the by-word of liberty in the past, a people who have proudly proclaimed the joys of individual liberty, should now equally proudly proclaim that Britain is the place where every single rule, however stupid and harmful, is obeyed implicitly. Whether that is true is irrelevant. The problem is that blind obedience has taken the place of freedom as a matter for self-congratulations.

That sad little threnody brings us to the whole subject of internal passports (aka ID cards). As it happens, the Wall Street Journal Europe on Tuesday of this week carried a long article about the problem of terrorism in Europe. Its main theme was not quite as new as the two authors, David Crawford and Keith Johnson thought: there is a serious problem in all the western European countries with a few people who have lived in them for two or three generations, who were born and brought up in them, and who should, therefore, feel their immediate loyalty to those countries, actually deciding to join various terrorist organizations.

We knew this when young Britons were found fighting with the Taleban in Afghanistan or among homicide bombers in the Palestine. The Dutch found this out when a young man of Moroccan descent, one who had never lived in Morocco, brutally murdered Theo van Gogh, the film director.

The Spanish are learning to live with the fact (though they are still finding it hard to accept that they threw away an election) that the Madrid bombs were placed there by inhabitants of Spain who had formed themselves into terrorist groups and had links with Al-Quaeda before 9/11. Other terrorist groups, also mostly made up of second and third generation inhabitants of Spain have been arrested.

There are groups in France, in Belgium, in the Netherlands. In other words, in countries that already have ID cards. And, furthermore, all these young men would have had them. The idea that somehow, the introduction of ID cards in Britain would be an adequate substitute for intelligence work is being blown apart (if I may use what can sound as an unfortunate phrase in the circumstances) by the unravelling of the existing groups.

A US Navy aircraft carrier battle group, based on the carrier USS Lincoln, is heading from Hong Kong to Sumatra. Five ships from the 17-strong group are to be deployed off Sumatra, the area worst hit by Sunday's tsunami. Nine P3C Orion surveillance aircraft, including some based at Kadena Air Base on Okinawa, Japan, have also been deployed.

Six C130 transport aircraft based out of Japan are being diverted to Thailand to help in relief operations and the first of many C130s has landed in Indonesia. Flying out of Kadena, Japan, it touched down in the Sumatran city of Medan on Thursday with a load of relief supplies and body bags for the estimated 80,000 dead in this country alone.

The aircraft also brought an advance team of about a dozen troops who will assess the situation and determine the logistics needed for the US relief operation.

Along with the airport at Medan, a Thai navy air base used by US B-52 bombers during the Vietnam War is turning into a hub for the US military-led relief effort, which will also include humanitarian operations for Sri Lanka and India. By next week, 1,000 US military personnel will be based there, helping with relief operations.

In Sri Lanka, 26 medical specialists from the Army, Marines, Air Force and Navy arrived yesterday help with efforts to prevent outbreaks of disease in crowded refugee centres.

The US Navy has also answering the call for help by deploying Expeditionary Strike Group 5, based in Guam. The three-ship force, comprising the amphibious assault ships, USS Bonhomme Richard, USS Duluth and USS Rushmore, initially scheduled for R&R, were immediately turned round and despatched to the disaster area.

With a combined crew roster of more than 6,000, this force not only has specialist medical capabilities, including surgical theatres, but also super-lift and medium-lift helicopters that can be used for a variety of missions to include search and rescue as well as transport of relief supplies.

Particularly useful will be the force's Air Cushioned Landing Craft Vehicles (LCAC). These are assault landing craft capable of speeds in excess of 40 knots when carrying a 60-ton payload, which can deliver supplies direct onto otherwise inaccesible beaches.

The force has water-making units that can provide about 50,000 gallons of fresh water each day, and carries all-terrain trucks than can be used to deliver supplies to outlying areas. Its complement of US Marines provide a highly disciplined labour force that can be used to assist hard-pressed civilian authorities, while sailors are able to provide electrical services and welding capabilities. In fact, the whole gamut of supplies and capabilities needed in disaster relief are on these ships.

This is just the immediate US response to the disaster, and much more military equipment is being mobilised, ready for deployment as soon as the assessment reports come in.

And what is the EU doing? Next week, it is hosting a donors' conference. The caterers are on high alert.

Thursday, December 30, 2004

Human nature being what it is (as Miss Marple would say) and political thinking being what it is (as she most definitely would not say), any admission that a certain political model is a duff one becomes as rare as an albino raven. Rarer, if anything.

Instead, we are told, on no evidence whatsoever, that the given duff model is one that the rest of the world aspires to. The rest of the world may happily choose another model and overtake the duff one in a puff of smoke but that does not stop the strange assertions.

Take the National Health Service, for instance. (No, I don’t especially want it either, but, together with the rest of the country, I am stuck with it.) A duff if ever there was one. Yet, how often have we heard the ridiculous assertions that it was the envy of the world? So envious is the world, apparently, that nobody has the slightest intention of imitating it, presumably because they want to preserve its pure, unadulterated uniqueness. (The Soviet Union and other socialist states do not count, as theirs was the original. Driven by ideology rather than good sense Nye Bevan took the wonky Soviet medical system as his example.)

The same applies to the EU, a customs union that has morphed intentionally into a

“tightly regulated single or internal market, with a cumbersome supranational bureaucracy which now incudes the Commission, Parliament, Council, Court of Justice, the acquis communautaire and the single currency (presently used by fewer than half of EU-25) run by a European Central Bank.”

This quotation is taken from a recently published paper by the Centre for Policy Studies, the first of a new series, called Perspective. The title of the paper is self-explanatory: Backing the wrong horse, and it is by Ian Milne, some time editor of the European Journal, some time editor of eurofacts and present Director of Global Britain, as well as author of many papers and articles on the European economy and a man with a long career in industry and merchant banking.

Mr Milne tends to write dryly and soberly, studding his prose with a great deal of economic data, usually taken from official sources. Properly looked at, these sources paint a much more dire picture of the EU economy than the average eurosceptic can manage. That is probably why they are so rarely quoted in any detail by europhiles, who talk airily of benefits being so great as to require no calculation.

In his introduction, Milne outlines the three basic models of internatinal trade: customs union, Free Trade Agreement (FTA) or going it alone. The EEC was never intended to be an FTA. From its beginning it was a customs union, the obvious argument being that a customs union can be turned eventually into a political one and, even, into a state. (I am not getting involved in that silly discussion about it being federal or not federal.)

At the beginning of the twenty-first century, with the world very different from the one in which the customs union of the Treaty of Rome was formed, the EU faces various economic problems: it has underperformed for a decade or more and there is no relief in sight; its aging demographic profile is unlikely to help growth in productivity. At the same time, it is clear that membership of the EU has imposed serious economic burdens on the UK (though these are greatly augmented by the present government that seems to have learnt nothing and forgotten nothing about old socialism and its disastrous consequences).

The real crunch is the point Mr Milne lists as third:

“… the EU model has not been emulated anywhere in the developed world. The relatively few customs unions that do exist outside Europe are in poor African countries, former Soviet dependencies, Gulf states and developing countries in South America.”

He does not add that none of these customs unions are developing into the sort of tightly regulated political and economic union that the EU is aiming at. But even without that, the list is indicative. The countries in various customs unions are not only not developing but falling behind. The wealth of the Gulf states is based entirely on oil and has led to very little economic and political development; Africa, with very few exceptions, who do not happen to be in customs unions, remains a constant and intractable problem; the former Soviet dependencies are going nowhere and are steadily being bullied by Russia back into complete dependency.

That leaves South America, with several customs unions, none of which are showing any signs of turning into a political one, despite the occasional high rhetoric.

“Meanwhile, the US, building on the success of NAFTA (Canada, the US and Mexico), has signed 15 FTAs and is negotiating or has announced its intention to negotiate FTAs with another 11 countries, making 26 in total. By 2005 it hopes to complete negotiations on the Free Trade Agreement of the Americas (FTAA), creating a 34-country free trade zone of 800 million people stretching from Alask to Tierra del Fuego.”

Another possibility, studied and developed by the Heritage Foundation is a Global Free Trade Area (GFTA), which we shall discuss on this blog at some future date. The EU itself, though negotiating various free trade agreements with other groups or individual countries, such as Mexico, remains resolutely wedded to its 1950s model. The 1950s, let me remind everyone, may have been a good time for clothes but was one of the worst decades for politics.

While we remain in the EU, we and other members, remain shackled to this outdated, extremely duff model. The two things left to us will be to try to bully neighbouring countries into joining it by refusing to sign free trade agreements and … to go on telling ourselves that the world envies us and tries to emulate us.

In the ultimate bureaucrat's dream, this week sees the start of the EU's Emission Trading Scheme (ETS), whereby more than 15,000 power plants and factories across Europe have been given allowances for the amount of carbon dioxide (CO2) they will be allowed to emit.

Those that cannot meet their emission limits are allowed to buy credits from companies which have not used their quotas on a newly established trading market, to avoid financial penalties for overshooting their targets, set at €40 for every excess ton of CO2 they emit.

Needless to say, with handling commissions, this new and entirely artificial market promises to be lucrative for a number of financial institutions, given the scale of the market to judge from non-official trading schemes. Some 2.3 million ton exchanged hands in October on the informal CO2 futures market, as much as the first nine months of the year.

Currently on the unofficial carbon market, one tonne of CO2 trades for an average price of €8.5 ($11), although the price has fluctuated widely, from €5.0 to €13.4 since informal trading began in February. Analysts forecast a market worth €50 billion during the 2005-07 contract period, with 5.0 billion tons of CO2 being traded at an average price of €10 a ton.

Of course, nothing is for nothing and the eventual losers will be thee and me, paying for what amounts to a new "stealth" tax through higher electricity prices and increased commodity costs. There will also be a social cost as large energy users, like aluminium smelters, will be tempted to relocate abroad, taking jobs and their profits with them.

This, of course, comes from an EU that is continually prating about increasing competitiveness, making schemes like this a spectacular "own goal", effectively adding €25 billion a year to the costs of the productive economy, with no long term benefit to the environment. When it comes to green madness, therefore, it could only be EU…

The Financial Times today reviews two books on our favourite subject – after the European Union, this is – blogs. One is by Dan Gillmor, technology correspondent of the San Jose Mercury News, who has been chronicling online innovation for the past decade, and the other by Joe Trippi.

Gillmor's book is called "We the media", a chronicle of "Grassroots journalism by the people, for the people", while Trippi's has the intriguing name: "The revolution will not be televised". He subtitles it: "Democracy, the internet and the overthrow of everything".

I like that last subtitle because I see the "blogosphere" as inherently subversive and see it as a powerful force in bringing down that dream of the European political élites – that accursed European Union.

But, as you would expect, it is the Amercian scene on which these books concentrate, with the FT review telling us that, when the history of the 2004 US presidential election is written, it will contain one word absent from accounts of all previous quadrennial contests. That word is "blog".

These two books, says the FT, go some way to enhancing our understanding of the blog phenomenon as it applies to the political arena, and what the likely implications are for the democratic process from the perspectives of candidates, citizens and the media. It continues:

In the "blogosphere", the bloggers' rather grand collective description of the world they inhabit, there are currently between 4m and 5m blogs and, like many online phenomena, that figure has been projected to double over the next 18 months.

The average blog, it is said, is written by a 15-year-old schoolgirl and contains detailed accounts of what she is wearing, what she is listening to and which boys she has a crush on. And certainly many, many ordinary blogs are just that - stultifyingly ordinary.

But according to Dan Gillmor, today's political bloggers are the direct descendants of revolutionary pamphleteers such as Tom Paine: spreading word of dissent, holding those in authority to account and encouraging citizen participation in a newly emerging public sphere.

I like that description as well as it strikes a chord. With the mainstream media "captured", it makes perfect sense that we should turn to the alternative media to make our voices heard.

Gilmor puts it in perspective, writing that "Tomorrow's news reporting and production will be more of a conversation… The lines will blur between producers and consumers, changing the role of both."

However, according to the Pew Centre for People and the Press, even during the election campaign only about 4 per cent of Americans with online access said they referred to blogs primarily for political information. So long as that stays the case, the mainstream press will inevitably remain the focus of the mass of news consumers.

Yet, says the FT, while intellectual momentum appears to be shifting in the direction of the online world, what also seems likely to happen - and to an extent is happening already among "established" blogs - is that the blogosphere will itself stratify, with the most popular journals taking on characteristics almost similar to so-called "big media".

Joe Trippi, however, has the last word, with his experiences running an internet campaign for Howard Dean, the former Vermont governor who used the blogosphere to galvanise and motivate a huge number of grassroots activists and contributors to join his quest for the Democratic presidential nomination.

"Anyone with a computer was able to join the discussion," Trippi writes, "and once you joined the discussion, you had effectively joined the campaign, because eventually the discussion was the campaign. The campaign was what the bloggers helped make it."

That is what we hope will happen to the EU referendum campaign and is remains highly encouraging to see the number of eurosceptic sites springing up – as well as their quality. The media and the politicians might not like it but the future is blog-shaped.

This is not another earthquake, hurricane or mega-wave but can be perceived to be almost as disastrous in the wealthy but almost bankrupt western Europe. Hartz IV is the final phase of the German changes in the welfare sector, named after Peter Hartz, the Volkswagen executive who devised the plan, and it is due to kick in on January 1.

The idea is that unemployment benefit will be cut back, streamlined and generally reduced. As yesterday’s International Herald Tribuneput it:

“In a nutshell, Germany will dole out money only to those unemployed who need it, and compel them, with the threat of withdrawing all benefits if necessary, to do some kind of work.

After jobless Germans use up normal benefits, whose duration and generosity vary depending on how long a person has worked, they will get only the Hartz IV benefits: €345 per month in western Germany, and €331 in the East.

Recipients of this money, should they fail to find other work, will be also forced into "one-euro jobs," essentially low-paid state make-work programs that require little white-collar skill.”

Earlier in the year there were, as we reported several times large scale demonstrations, which consciously imitated the Monday demonstrations of East Germany for freedom and against totalitarianism. The new demons, against certain aspects of freedom, have died out and are not expected to be revived. To what extent Germans will simply accept the drastic reform of their forty year old generous welfare system is not entirely clear.

While there is no question that some changes had to be introduced, as the German state was going bankrupt and the economy collapsing, it has to be noted that there is no sign of an upswing. Unemployment rate runs at 10.8 per cent of the work force (4.5 million) and real jobs are not being created.

This brings us to the subject of the EU budget. Both the Commission and the incoming Presidency (Luxembourg) are demanding that the big contributors – and Germany is the biggest – should increase the proportion of GNP they hand over, in order that larger EU projects be created. Somehow, in the gloomy circumstances it seems unlikely that Germany will agree. In fact, Chancellor Schröder may well start eyeing the existing contribution with some wistfulness.

Now is the time of year when, in the absence of any real news – tsunami disaster apart - we have to suffer endless retrospectives and any number of articles forecasting trends and events for the coming year.

Inevitably, the EU will be subject to this treatment but, oddly, the Washington Times is one of the first newspapers off the mark, courtesy of UPI, which supplied the copy.

Consolidation, according to this source, is likely to be the key word in Brussels in 2005 as Barroso's commission gets down to work after a bumpy start in late 2004. The first task of "the EU's powerful executive body", writes UPI, will be to boost economic growth and create more jobs. Yea, right.

But the "second major challenge of the commission", and the EU's 25 member states, will be "to win approval for the club's constitution". Interesting how they rely on this cuddly term "club" - it doesn’t have the same ring as "evil empire".

In countries like Spain and Ireland, where the EU is hugely popular – or so we are told - there are likely to be large majorities in favour of the "blueprint", but the referendums in France and the Netherlands, due to be held during 2005, "are likely to be close-run affairs."

In both countries there is growing public hostility to the EU, and there is a real possibility that the constitution will be narrowly rejected in one of the two founding members of the club. This would make life easier for eurosceptic Britain and Denmark, which plan to hold referendums in 2006, but would plunge the union into a deep institutional crisis.

Here now, we get to the interesting bit. "In order to prevent this happening," says UPI, "EU leaders are likely to reach out to their 450 million citizens more in 2005."

For the first time, the commission has a vice-president in charge of communications – "the telegenic Swede 'Mad' Margot Wallstrom" - and is expected to show it is not the monster bureaucracy of popular mythology by slowing down its legislative output and focusing on everyday concerns like jobs and crime.

For their part, heads of state will attempt to portray the EU as a success story that has guaranteed peace and prosperity in Europe for half a century as they try to win over wary voters to sign up to the constitution.

Well, if that is all they are planning to do, we have very little to worry about – not least since the "peace myth" is so easily debunked.

Nevertheless, I suspect there will be more to the UK referendum campaign than just these issues. However, it is interesting to see what the official line is.

Wednesday, December 29, 2004

One is wholly disinclined to join the chorus of second-guessers who, armed with 20/20 hindsight, argue that the Indian Ocean should have been equipped with a tsunami warning system on similar lines to that provided for the Pacific.

For sure, adequate warning would have saved thousands of lives and it is notable that the Kenyan authorities managed to raise the alarm, clearing tens of thousands of people off the beaches before the tidal wave struck.

But what's done is done and there is no point at this stage trying to apportion blame, if any is due, for the scale of the disaster we are watching unfolding on our television screens. One can only pray that the rescue and aid services do their work with maximum expedition and manage to save those people who so desperately need help.

With that, however, we must not allow this disaster to disappear once the immediate crisis is over, when the media has packed its bags and moved off to the next major global event.

Even the most superficial view of the television footage graphically illustrates that this tsunami has caused major damage to the structures and infrastructures of some of the most impoverished regions of the world, damage that is going to take years if not decades to repair.

Here, in the comfortable West, to make our donations and to express our concern is highly laudable, but it is not enough. We need to recognise that help is needed in the long-term, considerable help, way beyond the normal levels of humanitarian aid available through conventional programmes.

The level of funding required is such that we need, with utmost despatch, to rethink how we direct our aid to less privileged countries and how we are going to sustain the high level of aid needed over the years to come.

In this context, we should all pay heed to the words of Bjorn Lomberg on the subject of global warming and his views on the costs of Kyoto. According to his estimates, the best that can be achieved by the expenditure of between $150-350 billion a year is to slow down global warming by a six years of so, without in any way affecting the final outcome.

This compares with the total aid given each year to developing countries of about $50 billion, as against the estimated $200 billion that it would take once and for all solve the single biggest problem in the world. For that money, we could give clean drinking water and sanitation to every single human being on earth,

That calculation was made before the tsunami struck, but the thinking behind Lonberg’s arithmetic is now even more valid. It points to one thing. Kyoto is an expensive and unnecessary luxury that we – and in particular the developing nations - cannot afford.

In the days and week to come, therefore, we must consider quite how many people are to die, or live out their lives in poverty and disease because of the obsession with a formula that is based on cod science and is intent on wasting global resources.

At the forefront of this obsession is the EU which not only wants to saddle its own member state economies with massive, unnecessary costs, but wants nations like the United States and Russia likewise to wreck their.

Now is the time, therefore, to junk Kyoto and to put the money saved where it is really needed and will be for some time to come. And, if political constructs like the EU cannot or will not recognise this simple truth, it is time to junk them as well.

My colleague will be returning to this issue, and the general themes of aid and trade, in the near future - subjects which were never just academic but which have acquired a new urgency. They demand an expression of political will that, in the absence of political leadership, only we, the people, can articulate.

Without any specific topical "hook", today's Times sees a letter published from Professor Alan Lee Williams, Director, Atlantic Council of the United Kingdom, who recently attended the 50th anniversary of the Atlantic Treaty Association (ATA) in Rome.

There, he informs us, some 40 countries reaffirmed their support for Nato and the transatlantic alliance, declaring their hopes that America would continue to play a central role in formulating strategic concepts compatible with the development of the alliance's Response Force and its newly achieved operational capability.

However, writes Prof. Williams, "this show of support by ATA masked its underlying anxiety about the best way of reconciling Europe’s strategic culture with the reality of American power." Opponents of the Iraq war: France, Germany, Belgium, Spain, together with Greece and Luxembourg, apparently regard the fledgling EU Rapid-Reaction Battle Groups as the basis of a possible European superpower.

Williams then focuses on the Nato's ten members' refusal to send troops to the Iraq training academy, which he believes has opened up a deep fissure in the transatlantic relationship but he singles out the US concerns over the EU’s Galileo programme.

According to Williams, the US perceives this - "perhaps wrongly", he adds - as the basis of a collaborative venture with China and Russia, whose future strategic interests are likely to be contrary to those of a transatlantic alliance.

He then writes that many believe that France is seeking to develop a superpower Europe, conceding that "the drift towards a superpower Europe is real". A partnership rather than competition with America is required, if we are to maintain unity, he concludes.

When a man like Prof. Williams writes in this fashion, attention should be paid to what he is saying. Apart from being director of The Atlantic Council of the United Kingdom, he is also chairman of the Atlantic Treaty Association.

He is former chairman of the European Working Group of the Centre for Strategic and International Studies (CSIS) in Washington, D.C. He served as Labour member of parliament for Hornchurch from 1966 to 1970, from March to October 1974 and from 1974 to 1979.

Williams also served as parliamentary private secretary to the secretary of state for defence from 1968-70 and subsequently with The Rt. Hon Roy Mason, with whom he also served as PPS in Northern Ireland (1976-79). He was leader of the United Kingdom Delegation to the North Atlantic Assembly from 1975 to 1979.

This is a man who knows what he is talking about and for him to express his concerns, albeit in a measured and guarded fashion, confirms that there is something seriously amiss.

Just over a week ago, Christopher Booker in his column had tackled the same issue, then remarking that there had been an extraordinary act of duplicity at the heart of the announcement by the defence Secretary, Geoff Hoon, that the British Army is to be restructured round a series of "larger regimental formations".

With all the attention was on the abolition of old historic regiments, Mr Hoon did not explain that his new, more mobile units would be ideal for deployment as EU "battle-groups" which Williams marks up as “the basis of a possible European superpower”

Also remarking that the The Tory front bench was well aware of all this, but had not mentioned it because the party does not want the debate on Britain's defences to become a potentially divisive Euro-row, this brought a curious response last Sunday in a letter from Michael Ancram.

Ancram dismisses completely the suggestion that the Army's new regimental structure "is a result of the Government's plan to tailor British regiments to some secret EU manoeuvres", stating that he had told the House of Commons that the changes were not about restructuring but accommodating the Chancellor.

He then went on to state that: "Our position on the European defence project remains the same. Nothing new is being created except EU involvement. The fact is that with the new Battle Groups, the European countries are merely putting on the table military forces that already exist."

With today’s letter, therefore, we have two extremes of the argument. On the one hand, the battle groups are "the basis of a possible European superpower" and, on the other, European countries are "merely putting on the table military forces that already exist."

Of the two, I go with Williams. Ancram is completely wrong. He has misundersttod the nature of the cuts, not realising that Hoon is using the funds liberated to finance the equipment needed for his new "battle groups".

And these "battle groups" are not "existing forces". They are going to be new formations, specially equipped for the purpose and designed to inter-operate with each other. With these, and the development of “European defence identity”, the major European Nato partners are gradually drifting away from the United States as they see competition rather than partnership as the guiding ethos.

As a result, Nato in Europe is struggling to survive and we are in danger of seing the Atlantic alliance collapse. Williams is right to be worried.

Readers who look to this Blog for a constant stream of informed comment on matters EU are going to be sadly disappointed on this one, as we can only express our complete puzzlement over a development which seems to defy logic.

The proximate cause of our sudden lack of certainty is an article in the English language Greek newspaper Kathimerini which reports today that the EU is coming to the rescue of Athens, dolling out some €200 million to help it with its growing refuse problem.

That much, it seems, could hardly give rise to any great mystery except for one thing. While EU member states are closing down their landfill sites and steeling themselves to shelling out billions to finance unnecessary and highly unpopular waste incinerators, the UK alone having to commit £6.9 billion to that effect, the EU money dolled out to Greece is going to finance new landfill sites.

The funds are to go toward the building of new waste processing plants at Skalistiri in Fyli, Mavro Vouno in Grammatiko and probably Keratea, west of Athens, plus the construction of relay stations, for trucks carting away the capital’s 6,000-ton daily refuse output

It is estimated that the first landfill to be built, in Fyli, will be completed within 18 months — just in time for the closure of the capital’s only existing dump, at nearby Ano Liosia. The EU commission has earmarked some €40 million for the Fyli project, while the construction of the Mavro Vouno site will draw about €16 million from EU funds.

Any which way you look at it, this does not make sense. Why, when we are closing down landfill sites and planning to build a network of expensive incinerators to meet EU requirements is the self-same EU funding landfill sites in Greece? One can only ask, what on earth is going on?

Yesterday we posted a story about how, in its own way, the EU could be worse than a tsunami in its long-term effects on the third world.

In that story, we mentioned the plight of Kenyan farmers and, by a strange coincidence, an update of our original story, posted on 4 August, has appeared in Kenya's Standard newspaper.

It appears that the situation has got considerably worse as local horticultural producers are giving up the unequal struggle with EU-inspired red tape and their production is being taken over by importers from the industrialised countries.

These importers now control 40 percent of the export market and are threatening to lock out smallholders from the lucrative EU market, grabbing the lions’ share of the £160 million export trade in fresh fruits, vegetables and cut-flowers for themselves.

Before the horticultural export boom in the 1990s, smallholders produced 70 percent of vegetables and fruits shipped from Kenya but as the scale of exports has grown, the share has dwindled. Now the Food and Agricultural Organisation (FAO) is worried that local producers are being marginalised by multinationals who are establishing their own farms in the developing countries.

FAO says in its 2004 report that by the end of the 1990s, 40 percent of the produce was grown on farms owned or leased directly by importers in the developed countries. Another 42 percent was produced by large commercial farmers while small-holders produced a meagre 18 per cent.

In the wake of this report comes rising anxiety that that stringent market access conditions into the EU – some of which come into force next year – are going to make the situation even worse. Most of the requirements are difficult for smallholders to meet and it is estimated that £16 million is needed to help them comply.

All farmers growing produce for the EU market must provide full evidence of traceability and demonstrate that minimum environmental and hygiene standards were observed.

It is not so much meeting the standards and producing the paperwork which is causing the problems, which are made worse by the requirement for the EU to approve the agrochemical products used – an impossible requirement for small scale farmers because all generic chemicals used locally are banned in the EU.

So much for the caring-sharing EU. With its obsession for bureaucracy, it is gradually killing off local farmers in Kenya, just as its own CAP has been progressively wiping out small farmers in EU member states. And all this is done in the name of "health 'n' safety". But whose health, and whose safety?

Tuesday, December 28, 2004

Little 'ol Ireland, darling of the Europhile classes, is in trouble with its masters over in Brussels for quite deliberately ignoring an EU directive.

The law in question is Council Directive 92/100/EEC of 19 November 1992 on "rental right and lending rights and on certain rights related to copyright in the field of intellectual property".

It was introduced to harmonise the lending of works by public institutions such as libraries and universities. Because book borrowing may lessen the demand for buying certain works, the directive gave authors the right to forbid the public lending of their work.

Member-states had the option of establishing a right for authors to be paid when their works were lent by public libraries and they also had the right to exempt certain categories of libraries from making this payment.

However, the EU commission found that Ireland, contrary to the terms of the directive, had exempted all public lending institutions from the charge. Just before Christmas, therefore, it announced that it was referring Ireland to the ECJ

Interestingly, a spokeswoman for the Irish Department of Enterprise, Trade and Employment pointed out that the decision to exempt all Irish libraries was a deliberate one, on the basis that the Irish lending pool was very small and the State had a policy of making cultural information available to the public.

What is the trouble with these people. Directives are not optional – they are there to be obeyed. After all this time, don't the Irish know who's boss?

It is entirely understandable that such an elemental force of nature as a giant tidal wave, ripping apart communities in south Asia and leaving a trail of death and destruction, should capture the news headlines and all of our sympathy.

But behind those headlines is another force – this one man-made – which in its own way leaves behind it a trail of death and destruction. But so slow and insidious are its effects, and so indirect, that the damage is rarely recognised and never properly calculated.

That force is the European Union – and the damage it does is the result of its predatory and destructive trade policies towards the third world. And while it may not leave piles of bloated corpses on exotic beaches, the death and destruction, in terms of poverty and the concomitant disease and ill-health is every bit as real.

And now, according to The Guardian, it is the turn of tens of thousands of impoverished banana plantation workers and small producers in the Caribbean and Latin America.

Their livelihoods have been put at risk by planned changes to the EU's banana import regime, where the plan is to dispense with a complex system of quotas and tariffs with a single fixed rate tariff of €230 a ton by 2006, compared with the current €75.

Driven by the demands of European supermarket chains for low-priced fruit, this means that multinational corporations controlling the global market are already slashing wages, closing plantations and shifting to even lower-cost countries with a non-union culture.

This is what poverty campaigners call the "race to the bottom" and it will particularly affect Caribbean producers who supply 20 percent of the EU market. Latin American countries, which provide 60 percent, could lose a third of their exports or £400m a year and at least 75,000 jobs.

So damaging will this be that, together with its other baleful effects on fragile, third world economies, it is no exaggeration to suggest that, over the longer term, the EU is actually worse than a tsunami.

"Who'd run a business?" asks Ruth Lea in her "personal view" published in the Daily Telegraph business section today.

Launching into familiar territory, she notes that regulations are estimated to cost business £100 billion (or 10 percent of GDP) a year, but then launches off in a tangent, suggesting that, while the regulatory burden continues to increase in this country, other continental economies are beginning to recognise the problem and do something about it.

Her catalogue of woes makes sombre reading, not least because a substantial part of the new burden coming our way cannot be blamed on “Brussels”. There is, for instance, the "Warwick Agenda", an agreed set of employment law reforms for Labour's third term, which was decided in July 2004 between union leaders and Government ministers.

The measures included ending the "two-tier workforce" in public services, extending the ban on the dismissal of striking workers from eight to 12 weeks and increasing redundancy pay.

Then there are the proposed extensions to "family-friendly policies", including increased paid maternity leave and greater flexibility for parents with young children, as advocated by Patricia Hewitt and seconded by the Chancellor. The Chancellor specifically announced in his pre-Budget Report that paid maternity leave would increase from six months to nine months in 2007, with the goal of a year's paid maternity leave.

Nevertheless, Brussels is right there, adding to the burden. Writes Ruth Lea, the Temporary Agency Workers Directive is temporarily in abeyance, but the Information and Consultation Workers Directive is due to be phased in between 2005 and 2008 and the Equal Treatment Directive concerning age and disability is due in 2006.

Coincidentally, also in the pages of the business section is news of another impost - the third EU money-laundering directive due to come into force at the beginning of 2005.

The two earlier money laundering directives are estimated to have cost the British financial services sector around £100m and now, under the regime imposed by this new directive, universities and service businesses such as office cleaning companies will need to change their business practices, being prepared to notify authorities of any suspicious transactions – i.e., any customers who want to pay more than €15,000 in cash.

The third directive will draw in a host of businesses that are less attuned and not so aware of the risks of money laundering, and that will in many cases not have the necessary safeguards in place. The need for these companies to now track and report on potential money laundering attempts will introduce a new administrative burden – and cost.

It is suggested that, for many companies, the solution is to appoint a specific person to deal with the regulations but, as always, this would be costly for smaller businesses.

If these regulations actually achieved anything – like preventing terrorist activity – there might be some justification for them but, as some experts have observed, the flow of notifications has now become so great that it exceeds the authorities' capabilities to process them. Suspicious cash movements tend to be "buried" in the welter of information about perfectly legitimate transactions and the problem is now set to become considerably worse.

As always, the answer is "targeted" intelligence but this has never been the strong suit of government – and especially EU – organisations, which prefer to go through the procedural motions rather than achieve anything constructive.

Thus, in the dog days of the old year, as we look forward to the bright new year of 2005, the story remains the same – another day, another regulation. And, if Ruth Lea is asking "who'd run a business", increasingly, to the detriment of economic activity in this country, the answer is "not me, guv".

Following the embarrassing failure of the so-called Lisbon agenda which aimed to turn the EU into most competitive region in the world by 2010, a brace of commissioners have come up with another cunning plan.

First off the blocks is EU industry commissioner Guenter Verheugen, who is to launch the plan in February. Like its predecessor, it aims to boost growth across the EU, but this time the focus is on creating new jobs, especially in the services, training and leisure industries.

The plan is supported by Neelie "Board Lady" Kroes, who wants to relax competition rules on companies to boost European businesses, with easier regulations on state subsidies for some sectors She is targeting "unnecessary administrative hurdles", seeking to make the whole control system made "more transparent and less complex".

What is worrying is that Verheugen is calling the plan a "real cultural revolution", an unfortunate choice of words, considering what happened during the last one. But then he is also stating that he wants to "dust off" the current strategy on growth, perhaps unaware that this term was Vietnam-era jargon for helicopter medivac.

Giving more subsidies on easier terms certainly seems to fit this bill, as does another element of this "cunning plan" – doubling EU funding on research to €40bn over the next four years, with tighter co-operation between universities and industry

What nobody seem to be mentioning, however, is the €1 trillion drag on EU member state economies resulting from the rigidity of the social market economy and the stifling regulatory regime. But then, if the new commissions were to get to grips with that, they really would need a cunning plan.

Monday, December 27, 2004

Jean-Claude Juncker, prime minister Luxembourg, heading one of the smallest countries in the EU, is planning to take Germany, France and Italy head-on over the Growth and Stability Pacy when his country assumes the EU presidency on 1 January.

He has rejected proposals from the triumvirate to exclude certain types of spending from the eurozone's rules. This, Juncker says, would "open a Pandora's box" and weaken the pact.

Schröder wanted Germany’s net contributions to the EU budget to be taken into account when assessing whether it had broken the pact's three percent deficit limit, the French wanted military spending to be excluded from deficit calculations while the Italian sought to exclude research and development expenditure.

Not mincing words, Juncker has told the Financial Times that he “strongly opposes” removing categories of expenditure from the pact and is working on his own plans for revised rules which he hopes to unveil "by March at the latest".

He is thinking along the lines of keeping the 3 percent deficit ceiling, but giving defaulters "flexibility" in setting timetables to eliminate "excessive" deficits. Countries investing in long-term structural reform of pensions reform or investing for the future would be given more time, as would those with low levels of public debt.

This last proposal will put Juncker up against Berlusconi, who is arguing against the emphasis on debt. His country is massively over the 60 percent pact limit at 106 percent of GDP, a level exceeded only by Greece and comparing rather unfavourably with Luxembourg's four percent.

However, Juncker also appears to be willing to take on Greece, proposing sanctions for countries that disguise deficit and debt problems with false data. "We need to have specific procedures for this kind of behaviour," he says. "If we had had the Greek case two years ago, it would have affected the exchange rate credibility of the currency."

A small man from a small country Juncker may be, but looks like aiming to carry a big stick. However, as we have so often found, when it comes to dealing with the Growth and Stability Pact, words are cheap.

On this morning's BBC Radio 4 Today programme, Peter Mandelson called for Britain to use the referendum to "re-cement" its relationship with Europe.

"Every generation or so in Britain, there needs to be an opportunity to re-state or re-cement our commitment to the European Union," he told the programme. "This is one such opportunity and I think people need to seize it."

Nevertheless, he announced that he would not be playing a central role in the campaign, but would be cheering on Tony Blair "from the sidelines."

Not cheering at all, however, according to the Warsaw Business Journal, are Polish politicians. They seem to be falling over themselves in their haste not to hold their referendum.

At the very earliest, President Aleksander Kwaśniewski, together with left wing parties, wants the referendum to be held at the same time as next year's presidential election.

Worried that the turnout might not meet the requirements for a minimum 50 percent vote, he believes that the presidential elections might attract more voters than the referendum held on its own.

But the main opposition parties want to leave the referendum until 2006, until after UK has held its vote, in the expectation that the constitution will be rejected. The hope is then that Poland will not have to hold its own referendum.

No one but the hardest-hearted could do anything other than applaud the decision of the EU to send €3 million aid to help the victims of the tsunami which hit southern Asia on Sunday, with a death toll running into thousands.

While every little helps however, one cannot escape the thought that this is merely gesture politics, not least as the Australian government has pledged twice that – over €7 million - in immediate aid and like sums are pouring in from all over the world in cash and in kind.

But if such a comparison does strike a sour note, then it is well merited as the damage the EU does over term to third world economies is in no way compensated for by occasional largess, offered as high profile donations in times of emergency.

This is brought home by a feature article today on the CNN website, which explores the effects of EU trade policies and restrictions on the agricultural economy of Peru.

Such is the obsession with "health 'n' safety", observes scientist Michael Hermann of the International Plant Genetic Resources Institute in Colombia, that if the humble potato, discovered in Peru by the Spanish conquistadors five centuries ago, has only been discovered today, it would almost certainly have been banned from entering the EU market.

That is because potatoes can be toxic, and though they have been an integral part of the South American diet for hundreds of years, they would not pass muster now if measured against the European Union's strict standards for new foods, says Hermann. Furthermore, wheat, a staple that can trigger allergies to gluten, would probably also be vetoed, he adds.

The issue is far from academic, as there are many other plant varieties in Peru, commonly consumed by natives, which are as exotic abroad as potatoes once were. They could also find big markets among European shoppers if they could get through the door but current restrictions prevent their exploitation.

Many have health properties that are recognized locally. One is Yacon, a sweet root said to be beneficial to diabetics; another, the fruit camu camu, has at least 30 times the vitamin C content of oranges, and the oil from the sacha inchi vine is rich in Omega-3 and Omega-6 essential fatty acids that can protect the heart and lower cholesterol.

Although yacon and camu camu are already sold in Japan and the United States, full EU entry is on hold, pending approval under the Novel Food Regulation. That law requires extensive scientific data as proof that foods not widely known in an EU country before May 1997 can be deemed safe.

The approval process is also time-consuming. Exporters say it can take years and cost around $100,000 - prohibitive for small companies trying to market niche products that often lack scientific studies to back them up. Michael Hermann believes the novel food law places an "unreasonably high burden of proof" on producers.

This is a man who, from the comfort of his Brussels base, supports a system that denies Andean farmers the opportunity to better themselves, in an area where more than half the population lives on $1.25 a day or less. The value to Peru of an EU market in such novel foods is estimated to be worth $10 million a year.

Against that, the one-off donation of €3 million to the stricken countries of south Asia is indeed little more than a gesture – almost conscience money – for, while this gift grabs the headlines, behind the scenes the damage done far outweighs what little support the EU has offered.

I’d never heard of it before but yourDictionary.com has just released eight different "Words of the Year" lists featuring the Top Words, Names, Phrases, Numbers, California YouthSpeak, Internet, Sports-related, and Colour-related Words, as well as the Top Words in Pop Music and the Most Frequently Spoken Word On The Planet.

Predictably, the most frequently spoken word on the planet is "OK" but what is really interesting is the "Top word" list. At number four is "Blogosphere", the realm of the weblog. But sneaking in at number ten is "Eurosceptic", reflecting the increased usage of this word and its growing political importance.

There is also an additional "bonus word", a completely new entrant to the English language: Pajamahadeen. It describes those bloggers who have taken a prominent role in vetting (or ensuring the accuracy) of mainstream media news coverage. Its origin stems from the myth (slur?) that bloggers work in their dressing gowns and/or pyjamas – something which is, of course, never true of this Bog.

Either way, whether "pajamahadeen" or "eurosceptic", we are making a mark.

Sunday, December 26, 2004

The Mail on Sunday today quotes Michael Howard promising to axe one in five MPs and ministers, and one in three of "the army of spin doctors" recruited by Labour. Getting rid of the MPs, he says, would save £25 million a year, taking into account expenses and overheads.

Without actually admitting it, Howard is nevertheless acknowledging that which we all know, that MPs by and large are a waste of time and space – nothing more than "glorified social workers" as Tony Banks recently described them. With so much legislation being passed by Brussels, going nowhere near parliament, it is hard to disagree.

However, if Howard really wants to save some money, why does he not abolish the MEPs rather than the MPs? That alone could save of better than £80 million and if he goes the whole hog and gets us out of the EU altogether, we gain over £9 billion in saved contributions plus anything up to £20 billion a year in regulatory costs.

For that price, I would even be happy to keep the number of MPs as it was – although losing a few from over-represented Scotland would be no bad thing.

It is rather fitting that one of the first stories offered by Christopher Booker the day after Christmas should be about shit – or "sewage", if you prefer the polite word.

His story actually harps back to an item he ran in August when we learned that Scottish Water was in trouble with its sewage treatment plant at Daldowie outside Glasgow. Here, a plant costing £65 million had been installed to turn 50,000 tons of sewage sludge each year - nearly half of Scotland's entire sewage residue - into pellets.

For four years, this had been feeding Scottish Power's giant 2,400-megawatt power station at Longannet in Fife with a "carbon-neutral" equivalent of 42,000 tons of coal, enough to provide electricity for 30,000 homes. But it was then the subject of a legal action awaiting judgment in the Scottish courts, this whole process is threatened with disaster.

Last winter the Scottish Environmental Protection Agency (Sepa) ruled that the sewage pellets were not "fuel", but "waste". When the EC Waste Incineration Directive (WID), 2000/76 comes into law at the end of the year, Scottish Power would no longer be allowed to use the pellets to make electricity.

This set Scottish Water a huge problem. Under other EU laws it cannot dump sewage sludge at sea or in landfills. It is becoming all but impossible to use sewage sludge as fertiliser on farm land. On Sepa's interpretation of EC law, the only practical means of disposal was to burn it at great expense in incinerators - but only so long as these served no useful purpose, such as generating electricity. And the incinerators did not yet exist.

As we recounted at the time, Scottish Power had sought judicial review of Sepa's ruling, citing cases in the European Court of Justice that seemed to justify its claim that where a material can be used as fuel, it is not waste.

The judgment had been expected in September, but in fact it was only last Wednesday that the judge, Lord Reed, finally came up with his ruling. He fully upheld Sepa's interpretation of EU law and, unless an appeal succeeds, this means that Scottish Water will be in serious trouble.

The only way it will be able to dispose of sewage will be to have it incinerated, at a cost of hundreds of millions of pounds. In other words, it is all right to burn it, but only in a way which produces nothing useful.

Writes Booker, "Well done, Sepa and Lord Reed. And well done Brussels, for bringing us yet another of those ‘environmental benefits’ which Margaret Beckett likes to argue are the chief reason why we should all vote for the new EU constitution."

We are going to hear a lot more of this through the coming year. On top of the fridge debaçle – where incidentally, the Manchester clean-up is costing £850,000 and not the quarter of a million reported by the Telegraph on Friday - more and more of the mad Brussels diktats are about to kick in, not least the Waste Electronic Equipment (WEE) and the End of Life Vehicles Directives, turning our waste system into an even bigger shambles.

With a bit of luck, during this coming year, the mess the EU has made of our waste policy will become so obvious, as car wrecks litter the streets and the epidemic of fly-tipping mulitplies, that everyone will be able to see the the EU for exactly what it is - a pile of sewage.

Friday, December 24, 2004

I really could not resist this…. From the Chinese news agency Xinhuanet:

The constitutional treaty, adopted at a EU Brussels summit in June, is undoubtedly a work of genius. It is nothing short of wisdom, strategic mentality and extraordinary skills. Though constructed on a basis of delicate balances, the constitutional treaty embodies all the EU needs to further promote the integration process.

When my colleague told me about the Christmas message he was going to put up in our joint names I was in the middle of my baking (yes, I do useful things at times) and could only mutter assent as I clutched the receiver with floury hands. However, I can now take a break and support his sentiments.

Merry Christmas to all our readers, thanks for your support, interest and comments. We shall be back on Boxing Day, by which time the mellow mood of the season would have worn off.

As news and events scale down over the Christmas period, we too will be cutting back our coverage. Today and on Christmas day, posts will be very limited but we will pick up after the break with some of the analytical pieces that pressure of time has not permitted us to complete.

In the interim, both of us wish you a very happy and relaxing Christmas and thank you for your support and good wishes that brought us up to 90,000 hits. We look forward to you all being back with us after the break.

Thursday, December 23, 2004

According to the Polish News Agency, "EU membership works miracles for Poland".

Over the course of the eight months since joining the EU, Poland has become the largest beneficiary of EU aid after Spain, Greece and Portugal. Over €2.5bn has been transferred from Brussels to Warsaw (against €1.3bn paid in contributions to the EU budget).

In addition, for the first time in eight years farmers' incomes have increased; over 70 percent in case of the richest farmers and by one third in the case of the less wealthy ones thanks to EU direct payments, hikes in food prices and increased exports to EU markets.

Businessmen are also satisfied with EU membership as over 90 percent have boosted their incomes. Export production has risen by 24 percent this year, companies plan to increase employment and start making new investments.

Most of the fears linked to EU accession, says the Agency, including massive emigration and a "brain drain" haven't materialised. One of the few negative aspects, however, was a rapid increase in the price of basic food products.

So that's all right then. Polish taxpayers are giving the EU pots of money to make richer farmers richer and line the pockets of businessmen, in exchange for which food prices have gone up across the board, with local shortages because so much material is being exported to the wealthy West - all against a promise of increased employment some time in the future, maybe.

At the end of November, readers may recall the dramatic photographs of the massive fridge mountain published in some newspapers, not least the Daily Mail.

We observed at the time that this was yet another benefit of our membership of the EU but now, today, we learn from the Daily Telegraph that we are in for another treat.

In the "news in brief" section, a small article states, "fridge mountain set to subside": the mountain of 100,000 fridges is now to be cleared "with the help of £250,000 of taxpayers' cash."

But do not worry. Environment minister Elliot Morley said this was "an exceptional and isolated case". Until the next one of course.

We did of course have had a perfectly workable system of fridge collection and disposal, which cost the British taxpayer absolutely nothing until the EU and the British government screwed it up so completely.

Aren't we lucky we have such generous taxpayers who are so happy to cough up a quarter of a million readies to bail out the government when it makes cock-ups like this? And to think I spent the weekend in nick for withholding a mere £1000 tax. I might have thought different if I had known the government was going to spend my money on such a worthy cause.

The Independent is quick off the mark with a story on the fisheries council agreement, taking the greenie line as usual, headlining "EU retreat on cod ban may drive species to extinction."

Writes Stephen Castle, the Brussels correspondent, "Cod, once a staple of the British diet, could be fished close to extinction, environmentalists warned yesterday. They said a deal keeping North Sea fishing grounds open to trawlers was 'scandalous'".

But, of course, it is not really the fault of Brussels. "Under pressure from the Government, the European Commission backed away from plans to close up to a fifth of the North Sea to fishing fleets, to prevent collapse of cod stocks," Castle then adds.

"Instead, after a night of haggling, fisheries ministers emerged at 5.30am with a series of piecemeal moves, which include a one-day reduction in the days at sea permitted for some fishermen and tougher enforcement of the existing rules."

True to form, environmental groups are "furious with Britain for blocking the proposed North Sea closures", a move that comes little more than two weeks after the report from the Royal Commission on Environmental Pollution proposed more drastic action. It said that, over time, 30 per cent of UK waters should be closed to fishing.

Then, Charlotte Mogensen, fisheries officer for the conservation group WWF, is given plenty of space to say: "For cod, the future looks very bleak because sufficient measures are not being taken. Ministers are putting the socio-economic aspects before the recovery of the species. If it continues this way, in the long run there will not be many fisheries to manage. It is not disappointing, it is scandalous."

Dear, oh dear, oh dear. I have already rehearsed in an earlier posting as to why fisheries closures would be disastrous, both for the fishermen and for the cod. I really, really am tired of these dim, half-witted eco-freaks who, in taking the moral high ground, aim to destroy everything they claim to hold so dear.

And these dim-wits do not even understand what is going on, much less the fishermen – and even I missed it until I saw a piece from the Malta news agency di-ve.com adding a detail which I had forgotten about.

That detail, which I have seen nowhere else – not even in the commission communiqué - informs us that: "With this new agreement, more fish will be caught during 2005 than originally planned but the quota will start decreasing during the coming years." Joe Borg, the fisheries commissioner, is then quoted saying that this would "rebuild stocks without economically crippling the fleets concerned".

Idiot! – me that is. I wrote about it when the White Paper first appeared in May 2002 – the proposed CFP "reform". This is the first year the "reform" applies and what now happens is that a mechanism comes into play called "multi-annual management plans".

Instead of quotas being determined annually at the council bunfight, they are now going to be set for a number of years.

However, while for the first year (2006) the council is allowed to set the catch – defined as "fishing mortality targets" - and the fishing effort limit, in subsequent years, the operation of the plan is to be undertaken by the commission, without needing council approval.

Thus, new broom Joe Borg is taking it softly, softly. Today the fishermen are relatively happy. Next year they are going to be screaming.

Wednesday, December 22, 2004

Largely, we have spared you the ins and outs of the Microsoft case, not least because "everybody" is quite happy to have a go at Bill Gates and there was an element of shadenfraude watching the EU having a go at his corporate giant.

Setting aside the prejudice engendered by the sight of too many "blue screens", each one signifying that yet again that one of Mr Gates's products have crashed and burned (although XP has been a trouble-free gem), one has to side with Bill on this one.

As most readers will be aware, the EU commission is trying to extract a whacking €497 million fine from Microsoft for its supposed abuse of dominant market position, the latter having bundled its multi-media player with its best-selling Windows operating system, thus – supposedly – freezing out its rivals.

The latest twist in the saga is that Microsoft has just failed to convince the ECJ that it should suspend enforcement action pending an appeal against the fine and, in particular, the need to produce an alternative Windows system without the media player. Microsoft was also objecting to having to disclose source code to rivals, to enable them to improve the performance of their products when used with Windows.

According to Nicholas Economides, an economics professor at New York University, "This is a very serious setback for Microsoft. It's the first time that a court has told them what they can and can't include in Windows. It's like telling General Motors what features it should have in their cars."

Setback it maybe, but the charge – and the remedy is a crock. Like millions of others, I have Windows multimedia bundled on my software, but I do not use it and have access to a number of other systems that work as well if not better. But now, Microsoft is in the mad position of having to produce two versions of Windows, one with the multimedia system and the other without, both at the same price.

You can just imagine the consume reaction: "Oh yes, I'll have the one with less features for the same price," you can hear them saying. Yea, right.

And, in future, because of this ruling, Microsoft is no longer bundling new products into future versions of Windows, so a planned anti-virus programme is to be sold separately, at additional cost. That really does help the consumer. Yet, even then, it is finding a way round, by combining more products with its Office word processing and e-mail software, which does not breach the market abuse rules.

But the biggest farce is that very few ordinary people actually buy Windows, as such. They get it pre-loaded with the computers they buy, so the choice of version is largely made by computer makers. Very few of these will risk selling their products without the multimedia version, so the "EU approved" version will be sitting on the shelves unsold.

Needless to say, though, the good 'ol EU is taking its action to protect consumers. In this, at least it is being consistent. Most other things it does it screws up, so why should it make an exception in this case?

Hands up those who knew that the next EU Presidency is Luxembourg’s. Well, it is and its Prime Minister, Jean-Claude Juncker, is beginning to throw his weight around.

The next six months should see an agreement on the 2007 – 2013 EU budget (during which period, incidentally, there will be national elections, European elections and a new Commission – none of that will have an effect on the budget, which, once agreed, rolls on).

Will it be agreed, though? And on what terms? As we know, the supposedly free-marketeer Commission President Barroso has called several times on the EU donor countries to raise their contribution to the EU budget, in order to enable the creation of new EU projects. Not one’s usual definition of a free-marketeer or liberal economic thinker, but let that pass.

Now we have M Juncker joining the chorus. As all incoming presidential leaders, he has made a statement about the next six months:

"If we don't arrive at an accord on the outlines by June 2005, it will be impossible to enact the programmes which should be available on January 1,2007."

That sounds a little alarmist, but he needs to be in order to whip the members into submission. The trouble is that it is not just an agreement he wants but an agreement on the terms he is outlining. These are not very popular with the biggest contributors, Austria, Britain, France, Germany, the Netherlands and Sweden. They insist that their contribution should be 1 per cent of Gross National Income (GNI). The Commission and the incoming Presidency would like to raise the contribution to 1.14 per cent, in order, as AFP says:

“…to enact legislation for ambitious infrastructure projects and subsidies for the bloc's newest and relatively poorer members foreseen by the EU”.

The words cloth and coat and cutting come to mind. The eurozone countries are in economic trouble, with the two biggest, France and Germany, in greater trouble than the others. They need to concentrate on those long delayed and almost impossible reforms that will drag them out of the rut. Continuing economic weakness with an over-strong currency spells disaster.

While we are on the subject, whatever happened to the Lisbon process? It was meant to turn the European economy, whatever that might be, into the most efficient, knowledge-driven one by 2010. We are almost half-way there and nothing much has happened apart from an ever thicker mesh of regulations being spun by the giant spider in Brussels and, for entertainment, a large selection of scorecards that are meant to show entrepreneurial spirit.

In the circumstances, the idea of handing over more money to the EU for various projects, whose usefulness is doubtful and whose accountability is non-existent, tends to be greeted with scepticism by the donor countries.

M Juncker is not despondent. He has six months to find a compromise between the position of the donor countries (“Can’t pay, won’t pay”) and that of the Commission and Presidency (“The Don has a small proposition to make.”). Of course, if he does not succeed, he will be able to hand to mess on to his successor, Tony Blair. And just in case anyone thought his task was too simple, M Juncker has also announced that he intends to reform the Growth and Stability Pact. It is not stupid, he insists, non, non, non. But it could be made more intelligent.

As usual it is the Chinese news agency Xinhua that has provided an intriguing light on the general rejoicing at the somewhat belated release of the two French journalists by an Iraqi militant group. They were kidnapped in August, causing a ripple of shock in France. The French had thought that they were well protected by their anti-American stance. It turned out that various rather forceful bits of legislation, not to mention the über-forceful behaviour of the French security forces, have made France less loved by Islamic militant groups than they would like to be. How very sad.

It seems that, after a great deal of negotiation and world-wide solidarity (well, among those who owed the French government favours), many trips by various important people, most recently the troubled Prime Minister Jean-Pierre Raffarin, have finally produced the desired result: the French journalists have been freed, are on their way home and President Chirac made an emotional speech on TV.

We have been here before, with the Italian aid workers. And, what do you know? Even before anyone could ask the obvious question, M Raffarin has denied that any ransom had been paid. One’s usual reaction to an unsolicited denial by a politician is deep suspicion merging into certainty that what he is denying is the truth.

It cannot be so. For we are told by the Communist Senator, Nicolas Borvo that Raffarin assured all at a meeting that there had been no demands for ransom and no payment. That should be enough to doubt the scoffers. As M (or should that be Comrade?) Borvo put it:

"He was very clear. We can consider this to be the word of the prime minister."

After the conclusion of the December fisheries council, the BBC website this afternoon proclaims: "Skippers cheer fish catch deal". This, I suspect is the cheer of condemned men who, having been told they were going to be boiled in oil are crying with relief when they find that they are only going to be boiled in water.

At first sight, however, the news does look encouraging for, as reported yesterday on this Blog, the EU commission plan to close fishing grounds in the North Sea next year has been abandoned and we now hear that a second proposal, to reduce days at sea, has also been largely given up. Scottish fishermen will be able to keep their allocation 15 a month, provided they use 120mm mesh, to reduce the by-catch of juvenile fish.

This is going part of the way towards sensible management, but it is actually the wrong approach. Proven techniques are available which enable haddock to be extracted from a mixed fishery without touching the cod – using what is known as selective gear, but once again the commission has neglected this valuable conservation measure.

Furthermore, many fishermen last year were finding that the days allocation was insufficient to catch their quota allocation and, with larger mesh sizes, longer or more hauls are needed to pull out the fish.

And even then, the days at sea allocation is not without a catch – to coin a phrase. According to the fisheries commissioner Joe Borg at the end-of-council press conference, the full allowance is contingent on the UK adopting additional enforcement measures, including a commitment to an automatic institution of administrative sanctions for infringement of regulations.

This is the equivalent of "on-the-spot" fines, and is going to give already unpopular fisheries inspectors a great deal more power, in circumstances that are inevitably going to lead to considerable injustice.

Moreover, although there are some local quota increases, quota levels overall are 15 percent down, which means that fishing opportunities throughout the waters of EU member states have been cut significantly.

While awaiting the detail – which will not be forthcoming until mid-January - perhaps the only comfort to take from the situation as we know it is the squawking of the environmental groups, which are upset that the commission has not gone ahead with fisheries closures.

Helen Davies fishing policy manager for the World Wildlife Fund, for instance, says she was "shocked" that proposals to close fishing areas had been shelved, adding: "The fishermen might be celebrating now, but we don't think these measures will help the industry at all."

Since the greenies idea of saving the fishing industry is to close down the fishing industry, that she is so "shocked" is not exactly going to cause anyone to lose any sleep.

As we know, the Commission is not going to do anything about the fact that France and Germany, the two largest economies in the eurozone, habitually break through the 3 per cent deficit barrier. (Or the fact that one after another, countries are shown to have submitted creative accounts in order to be accepted into it.) This, the smaller countries thought, was a sign that the Commission was going to turn a blind eye to all their various peccadilloes. But they were wrong in thinking that they could get away with what France and Germany can get away with. Up with this the Commission will not put.

Today the European Economic and Monetary Affairs Commissioner Joaquin Almunia announced that they are all set to start procedures against Greece and Hungary for non-fulfilment of deficit conditions. As AFP reported it:

“Greece, which has been in breach of the limit since 1997, is targeting a 4.6 percent deficit this year and 4.1 percent in 2005. Hungary's shortfall is forecast at 4.6 percent this year and 4.1 percent in 2005.”

Greece, as our readers will recall, has been filing rather interesting accounts and has developed a system of national budget presentation that puts Enron into the shade. The country that spends a larger proportion of its GDP on defence than any other European one, had simply forgotten to put armaments procurement on the annual budget for a number of years.

Creative accounting together with playing host to the most expensive Olympic Games in history means that Greece will not be able to get within the required 3 per cent deficit limit for some time. As far as anyone can recall, the Commission proceedings, if continued to their bitter end (a somewhat unlikely scenario) will result in an enormous fine imposed on the offending country. If paid (an even more unlikely procedure) it will push the Greek deficit into the stratosphere.

As far as Hungary is concerned the decision is bizarre, since the Commission had started with threats of proceedings against five other newcomers as well: Cyprus, the Czech Republic, Malta, Poland and Slovakia. It has now been decided that these countries, though still carrying a deficit of well above 3 per cent, have actually “moved to correct their breaches of the EU Stability and Growth Pact's limit on public deficits”. These moves have not been specified by Señor Almunia. Nor is it exactly clear why Hungary is deemed not to have “moved” in the right direction. Presumably, they, too will be fined, if the Commission completes the process.

Meanwhile, Portugal, having been told that it cannot put through a planned property deal that was going to salvage its budgetary position, has announced that it will implement “emergency measures” to deal with its own “deep crisis”, that is a deficit, somewhat higher that that famous 3 per cent of GDP.

“Pedro Santana Lopes, the outgoing prime minister, said on Tuesday he would announce special measures this week aimed at raising the €750m ($1bn, £516m)needed by December 31 to prevent Portugal from breaching the pact's budget deficit rules.”

Pedro Santana Lopes has been hampered in his attempts to raise €1bn in extraordinary revenue through the sale or long-term leasing of up to 200 state properties, in that the President decided to dissolve the government and call an election for February. A caretaker government cannot put such a large and controversial procedure in place. Instead, a leasing arrangement was agreed on, but this cannot be counted towards the reduction of the deficit.

At the moment it is unclear what Portugal will do to achieve the nirvana of 3 per cent or under, but one supposition is that the pensions of a state-owned bank will be transferred to a state body. One wonders how a private company or conglomerate would fare if it tried a similar manoeuvre.